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Friday, 9 September 2016

Global stocks slip, euro gains as ECB holds line on stimulus

A gauge of global equity markets fell modestly and the euro strengthened on Thursday after the European Central Bank reaffirmed its commitment to run its bond-buying program as long as needed, but did not confirm a specific extension of the plan.

However, with euro zone inflation still way below target and the ECB also trimming its 2017 growth forecast, Draghi said the bank was looking at options to enable it to pursue the money-printing program.

After a mixed bag of data over the past month, including poor German industrial orders this week, many investors had speculated the ECB might push ahead early with yet more stimulus moves.

"It was pretty much a non-event," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. "A fair way of describing it is he decided to keep that arrow (extending quantitative easing) in the quiver. There was a tiny bit of disappointment in that."

After ECB chief, Mario Draghi, said the bank had not even discussed an extension of quantitative easing, the euro gained ground, hitting a two-week high of $1.1326. The dollar .DXY touched a low of 94.465 against a basket of major currencies and was last off 0.16 percent at 94.805.

European shares were lower, with the FTSEurofirst 300 .FTEU3 off 0.3 percent.

A 2.2 percent decline in shares of Apple weighed on each of the three major U.S. stock indexes in the wake of its annual event on Wednesday. The company also said it would not release details on first-weekend sales of the newly announced iPhone 7.

The Dow Jones industrial average .DJI fell 29.76 points, or 0.16 percent, to 18,496.38, the S&P 500 .SPX lost 2.74 points, or 0.13 percent, to 2,183.42 and the Nasdaq Composite .IXIC dropped 19.09 points, or 0.36 percent, to 5,264.84.

MSCI's all-country world index dipped 0.12 percent after touching a 13-month high in the prior session.

German government bond yields extended earlier gains, up 5.3 basis points on the day at minus 0.07 percent after hitting a high of minus 0.061 percent. U.S. Treasury yields also rose, with benchmark 10-year Treasury notes down 14/32 in price to yield 1.587 percent, from 1.539 percent late on Wednesday.

The focus will now shift to the U.S. Federal Reserve when it holds a two-day policy meeting next week, as investors look for clues on the timing of a rate hike. Expectations are for the Fed to hold rates unchanged next week despite another round of strong labor market data on Thursday.

Oil shares surged after U.S. Energy Information Administration data showed a much bigger-than-expected draw in inventories.

Brent crude was up 3.6 percent at $49.69, after hitting a peak of $49.87, its highest since Aug. 26. U.S. crude was last up 3.7 percent at $47.19 after hitting a one-week high of $47.43.